Three ways to legally structure multiple businesses:

1. Single business entity with multiple DBAs.
2. Form separate LLCs or corporations for each business unit.
3. Create a holding company with separate LLCs or corporations beneath it.
4. Each to their own — the importance of considering each client’s unique situation.

Why would a business set up multiple entities?

A multiple business entity strategy typically includes two different types of entities. This is often done by retailers to protect each physical location as its own business, with its own assets. So if one location has a massive slip and fall lawsuit, the results are limited to an impact on that individual entity.

Can you run multiple businesses under one business entity?

The answer is yes–it is possible and permissible to operate multiple businesses under one LLC. Many entrepreneurs who opt to do this use what is called a “Fictitious Name Statement” or a “DBA” (also known as a “Doing Business As”) to operate an additional business under a different name.

How do business entities work?

In simplest terms, a business entity is an organization created by an individual or individuals to conduct business, engage in a trade, or partake in similar activities. There are various types of business entities—sole proprietorship, partnership, LLC, corporation, etc.

Is a business entity separate from its owners?

What Is a Corporation? A corporation is a legal entity that is separate and distinct from its owners. 1 Corporations enjoy most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.

What to know about forming multiple business entities?

When considering the entity structure, whether forming multiple entities operating in tandem or layered multiple entities, it is wise to consult with both legal counsel and a tax advisor familiar with the appropriate state’s corporate and tax laws.

What are the different types of corporate entities?

There are basically six choices: Below is a discussion of each entity, including a basic description, its advantages and disadvantages, the ideal candidate/business for such an entity, the cost to set it up and the most important takeaway. 1. Sole proprietorship A sole proprietorship is the simplest, most common way of organizing a business.

How to set up and structure multiple businesses?

Create One Corporation/LLC with Other Corporations or LLCs Under the Main Holding Company In the third approach, a holding company will own individual Corporations/LLCs for your multiple businesses. This scenario often comes into play for companies that are looking to be acquired.

What does a layered multiple entity structure look like?

It involves layering one form of a business entity either alongside or in conjunction with an operating business. The layered, multiple entity structure strategy would look something like this: One entity is established to serve as the ‘operating’ business and holds very few assets on its balance sheet.